No business wants to pay more than necessary for a freight shipping cost. Understanding the factors that impact freight rates is the first step to ensure your business gets the best rate possible. Starting a shipment project involves more than moving items from one place to another. If the process is done right, it can increase a company’s efficiency and bottom line. When done poorly, it can result in delayed shipments, unsatisfied customers, and unexpected costs. In this blog, we will discuss what freight rates are and the main factors that determine them. Use these factors to estimate how much your transport is going to cost to avoid surprises. 

What Are Freight Rates?

A freight rate is the price a shipper or broker will pay a carrier to transport a load. Freight rates are also known as freight charges. Carriers cannot give a constant set price since certain factors cause the price to continuously vary. There are many different factors that cause this fluctuation in freight rates, many dependent on the specifics of the shipment. Some of the main factors that affect the cost the most include the mileage of the haul, the equipment needed, the dimensions and weight, the season, and current economic demands. We will take a closer look into these main factors below.

5 Factors That Determine Freight Rates

Having a cost-effective and accurate freight cost estimate is crucial to effectively managing your business’s finances, so let’s look at some elements that affect rates. Keep in mind that determining the freight rate is a complicated process and that these factors below are important elements in getting an accurate estimate for the cost, but there may be more factors depending on your specific haul and unexpected occurrences.

  • Distance. The distance between the starting point and the destination point is a significant factor in determining freight rates. Longer distances require more fuel, additional labor costs, and possible operational expenses. If a shipment is sent to a location outside of the carrier’s service area, the process will result in higher costs. The length of the haul is separated into five categories: short-haul, mid-haul, tweener, long-haul, and extended-long.
  • Equipment. The type of items being shipped and the equipment needed to properly ship them have an effect on freight rates. There are five shipping methods that have their own rates, all dependent on the size of the load and the urgency of the shipment: full truckload, partial truckload, less than truckload, intermodal, and expedited. Additionally, the type of trailer can alter the rate. A van, flatbed, step deck, double drop, and specialized trailer each have their own costs. The rate will change even more if the shipment is being transported by boat or plane.
  • Size. The length, width, height, and weight of the load greatly affect the rate. Although the rate is dependent on all of these factors, the weight has the most significance. Heavier shipments require more fuel, therefore raising the rate. If a load qualifies as oversized or overweight, the price will rise even more. There will be added costs with state permits and escorts. However, states vary on their oversized and overweight requirements as well as their permit and escort rules, so the exact effect of the rate depends on the state that the load is traveling through. You can use an online freight dimensional weight calculator to help you determine this anticipated cost.
  • Time of year. Rates can vary depending on the season. Summer is usually a popular time for agricultural shipping, so rates might be higher than normal during those months. Additionally, the holiday season is a peak shipping time, so the rates would be high due to high demand. Road conditions based on weather can also alter expected shipping costs. For example, icy roads may cause traffic congestion, slowing down the haul and using more fuel than anticipated, resulting in a higher rate.
  • Economical demands. Relevant statuses during transportation in economic happenings can have a great effect on freight rates. Fuel prices are constantly fluctuating, and higher fuel prices cause increased rates to cover additional expenses. As the price of diesel also continues to increase, fuel surcharges are being added to rates. This extra cost is updated weekly. In addition to fuel prices, supply and demand is another economic condition that can affect freight rates. Competition between carriers and market stability influence how high or how low the current freight rates are. 

Hauling With Massey Towing & Truck Service

Determining the cost of a haul can be difficult, which is why working with a professional hauling company is the best way to avoid shipping cost surprises and complications. The professionals at Massey Towing & Truck Service will help you get your hauling project started and completed in a timely, cost-effective, and safe manner. We have seen large fluctuations in the freight rate market and can talk you through why these fluctuations happen. We can explain to you what impacts your shipping rate so that you understand our estimated cost. Whether your shipment needs to be transported via truck, boat, or plane, we are ready in the Texas area to give you an accurate quote. Contact us today!